LinkedIn looks to build on its impressive resume

LinkedIn and Facebook will celebrate the anniversaries of their IPOs just a few days apart this week. But their experiences as publicly traded companies couldn’t be more different.

LinkedIn Corp. promotes its service as a stepping stone to a more enriching career. As it turns out, the professional networking company’s initial public offering was a great place to start a rewarding investment portfolio, too. LinkedIn’s stock has nearly quadrupled in value from its $45 IPO price on May 20 two years ago. On Monday, it closed at $175.03 per share. In contrast, Facebook’s stock is hovering around $27 per share, down 29 percent since debuted on May 18, 2012 at $38.

LinkedIn is emerging as the standout performer among its cohort of hotly anticipated IPOs from Internet companies that connect people with common interests. The company is growing faster and yielding far better shareholder returns than the rest of a class that includes online deals maker Groupon Inc., Web game maker Zynga Inc. and business review site Yelp Inc., as well social networking leader Facebook Inc.

With the exception of Yelp, the stocks of all those other companies are stuck well below their initial public offering prices. Although Groupon and Zynga have fared worse, Facebook has been the highest-profile disappointment.

But for all its success, LinkedIn still hasn’t immersed itself into people’s lives and reshaped technology as profoundly as Facebook has. Although LinkedIn has been attracting more frequent visits since its IPO, people still spend far more time on Facebook and share more of their lives there. Unlike Facebook, LinkedIn hasn’t become a hub for other online services, ranging from games to music.

Even among its fans on Wall Street, LinkedIn is seen as little more than an online hunting ground for opportunistic employers on the prowl for talented workers.

But that could change if LinkedIn CEO Jeff Weiner and Executive Chairman Reid Hoffman realize their ambitions. As the 10-year-old company heads into its second decade, its two top executives want to establish its website as an integral part of the global economy.

“It would be a representation of every economic opportunity and every skill required to attain those opportunities,” Weiner said in a recent interview with The Associated Press. “We would have a digital profile for every company in the world and a professional profile for every one of the 3.3 billion people in the (worldwide) workforce. We would then be able to overlay professionally relevant knowledge for each one of those individuals and each one of those companies.”

LinkedIn still has a long way to go before it’s that pervasive. The service currently has profiles of some 225 million people and 500,000 companies.

But the odds of LinkedIn fulfilling its aspirations may be less of a longshot than the one Hoffman faced when he first started pondering a professional networking service in the midst of the dot-com bust in 2000.

At the time, Hoffman was worried about losing his job as a top executive at online payment service PayPal. The company had just burned through most of its cash, prompting Hoffman to mull other ideas with PayPal co-founders Peter Thiel and Max Levchin during a retreat at his grandparents’ house in Gualala, Calif. along the Pacific Ocean’s coastline.

A rough concept for LinkedIn came up then, but Hoffman didn’t pursue it at the time because PayPal started to thrive.

After eBay Inc. bought PayPal for $1.5 billion in 2002, Hoffman plowed much of the money that he made from that deal into LinkedIn. He started the company in May 2003 with several former colleagues from his pre-PayPal days — Allen Blue, Konstantin Guericke, Eric Ly and Jean-Luc Vaillant. The group debated several potential names, including Netra, Wellconnected, Bizrep and Connex, before settling on LinkedIn.

Hoffman’s gamble paid off. As LinkedIn’s controlling shareholder, his stake in the company is currently worth $3 billion.

LinkedIn now has market value approaching $20 billion and employs about 4,000 people. It’s expanding so quickly that it is running out of space at its Mountain View, Calif. headquarters located down the block from the home of Google Inc. There will be space for nearly 3,000 more LinkedIn workers once construction is completed on its new corporate campus in nearby Sunnyvale next year.

Things might not have worked out so well if Hoffman, 45, and Weiner, 43, hadn’t been introduced to each other at a technology conference in early 2008. They hit it off immediately, something Hoffman remembered a few months later when he began thinking of replacing Dan Nye as LinkedIn’s CEO.

Hoffman had been LinkedIn’s CEO during the first four years of the company’s existence, and he knew it wasn’t something that he wanted to do for another extended period — an aversion that differentiates him from other Internet visionaries such as Google’s Larry Page, Facebook’s Mark Zuckerberg and Salesforce.com Inc.’s Marc Benioff, who all relish running the companies they founded.

One comment

I consider my own experience with LinkedIn to be quite negative. I have filed formal complaints against them with the FCC, the FTC and with the State of California Department of Justice regarding what I consider to be their improper operating practices. Please see this URL for one example.

The FCC replied that my complaint is with regard to internet content over which they have no jurisdiction. The FTC has yet to be heard from.

The State of California Department of Justice replied to me by mail that they will “… request a response from them regarding your concerns.”, but also writes that their agency is “… prohibited by law from representing individual citizens in legal matters.”